Now that daylight saving time has begun, it means spring is just around the corner and the unofficial start to the home buying season is upon us. However, as you might have noticed over the past few months (and years), residential real estate sales are no longer seasonal but a year-round process. As I have mentioned in previous articles, Chattanooga is a very desirable mid-size city that buyers from all over the country are considering as their relocation destination. This increase in buyers has shifted our market to the point that any day that ends in “y” is a good day to list a home. However, the Chattanooga market is still suffering from an inventory shortage and the limited number of active listings is driving up prices in most, if not in all price points. We have seen this trend through the early part of the year as February’s sales number continued to rise.
Across the country, real estate markets remain hot ahead of the spring selling season with existing home sales up 6.7% as of the latest reports, according to the National Association of Realtors (NAR). Experts attribute the growth in sales to an uptick in mortgage interest rates, as buyers rushed to lock down their home purchases before rates move higher. Mortgage rates have increased almost a full percentage point since December, with the average 30-year fixed-rate mortgage briefly exceeding 4% in February, the highest level since May 2019.
Nationally inventory was at an all-time low of 860,000 as February began, down 17% from a year ago which equates to only about 6 weeks of inventory nationally. According to NAR's Chief Economist, Lawrence Yun, much of the current housing supply is concentrated at the upper end of the market. We are also seeing this increase in higher priced inventory in our local market, while homes priced at the lower end of the market are quickly disappearing, leaving many first-time buyers unable to find homes in their budget. The shortage of homes is boosting demand even further, and with bidding wars common in many markets, it’s no surprise sales prices continue to soar. Until housing inventory increases, multiple offer situations and frustrated home buyers will be ever present in real estate transactions.
Locally, New Listings in the Chattanooga region increased 3.6% to 1,055, Pending Sales were up 3.9% to 1,023 and inventory levels shrank 32.7% to 759 units on the year. In our five-county footprint - Hamilton and Sequatchie counties in southeast Tennessee and Catoosa, Dade, and Walker counties in northwest Georgia - there were fewer homes available in the month February as we have historically ever seen. There is a silver lining to these numbers and that is the fact that we are entering the spring and many people who have staved off the winter months are preparing for the better weather and are looking to take advantage of their increased equity in these super-hot markets.
The coming months will be telling in regard to what exactly all the pent-up demand will result in for homes coming onto the market. Chattanooga’s home prices continued to gain traction in the early part of the year and sellers are keenly aware that spring is the perfect time to present their homes to the market and to the large pool of prospective buyers. Here are the numbers that sellers will be looking at in moving forward over the next few months. The Median Sales Price increased 22.4% to $290,000 from where we were last year at this time. While Days on Market is down 44.7% to 21 days, which is very telling as it was 38 days just a year ago. Sellers should also be encouraged as Months Supply of Inventory continued to decrease by 36.4% to 0.7 months.
No matter what your needs are, in this market it’s crucial to consult a Realtor®. A Realtor will work with you to make sure your housing needs are taken care of. That’s Who We R®.